Our Terms of Service and Privacy Policy have changed.

By continuing to use this site, you are agreeing to the new Privacy Policy and Terms of Service.

Surging commodities take breather despite Fed

By Julianne Pepitone, staff reporter


NEW YORK (CNNMoney.com) -- Prices of most major commodities stayed mixed Wednesday, even after the Fed announced a $600 billion asset purchase plan.

Commodities have been on a tear since late August, when Federal Reserve chairman Ben Bernanke said the central bank would take "unconventional measures" to keep the economy afloat.

The speculation ended with the Fed's statement Wednesday afternoon, in which the central bank said it will buy $600 billion of longer-term Treasuries by the end of the second quarter of 2011.

These asset purchases, known as quantitative easing, are designed to boost the economy and lower interest rates.

But all the talk about quantitative easing in the past few months has put pressure on an already weak U.S. dollar, which affects commodities because they are priced in dollars around the world. A lower greenback makes it cheaper for foreign investors to buy commodities.

Still, the Fed statement didn't have much an effect on commodity prices Wednesday. Crude oil for December delivery rose 0.9% to settle at $84.69 a barrel, but the major metals were sharply lower. Gold slid 1.4% to settle at $1,337.60 an ounce.

Crude oil prices have jumped almost 4% in the past month alone, while gold is up 1.6% in the same period. Sugar, cotton, corn, wheat and coffee have all hit new highs over the past two months.

Some economists are worried that these commodities will head even higher in the next few months as a result of the Fed's more aggressive policies.

Most of the so-called "consumer" commodities were sharply lower, with cocoa, sugar and coffee each sliding about 1.5%. Cotton bucked the trend, rising 1.1%.

Oil inventories: The Energy Information Administration released its weekly oil supply report earlier on Monday. The EIA said U.S. crude stockpiles rose by 2 million barrels last week.

The government report also showed that gasoline inventories dropped by 2.7 million barrels. Meanwhile, distillates used to make heating oil and diesel decreased by 3.6 million barrels. To top of page

Overnight Avg Rate Latest Change Last Week
30 yr fixed3.69%3.76%
15 yr fixed2.80%2.82%
5/1 ARM3.07%3.10%
30 yr refi3.69%3.76%
15 yr refi2.83%2.83%
Rate data provided
by Bankrate.com
View rates in your area
 
Find personalized rates:
Index Last Change % Change
Dow 16,204.97 -211.61 -1.29%
Nasdaq 4,363.14 -146.42 -3.25%
S&P 500 1,880.05 -35.40 -1.85%
Treasuries 1.85 -0.02 -0.86%
Data as of 10:57pm ET
Company Price Change % Change
Bank of America Corp... 12.95 -0.30 -2.26%
Facebook Inc 104.07 -6.42 -5.81%
Freeport-McMoRan Inc... 5.68 -0.04 -0.70%
Microsoft Corp 50.16 -1.84 -3.54%
General Electric Co 28.54 -0.64 -2.19%
Data as of 4:15pm ET

Sections

Anheuser-Busch has been the exclusive beer advertiser featured during the Super Bowl since 1975, and it's spent more on Super Bowl advertising than any other company for the last five years in a row. More

It was the first offer the South American nation has made to the holdouts which in Argentina are called "vultures." More

Laurie Segall sits down with Foursquare's new CEO Jeff Glueck to discuss the company's latest round of funding at a lower valuation, and their hybrid consumer/enterprise business model. More

Nonprofit JumpStart has launched a new $10M fund that will only invest in women and minority-led startups. The catch: You have to move to Ohio. More

Portland, Oregon, is often described as the last affordable cool city on the West Coast. But as more people move to the city, it's becoming increasingly unaffordable. More